Amid strengthening economy, home sales fall short

Single-family home sales fell unexpectedly in March in the Western United States while markets remained strong elsewhere throughout the country, signaling a still-strengthening housing market.

  • close
    A home for sale in Roswell, Ga., in December 2015. The National Association of Realtors reported reports last week that sales of existing homes fell in March.
    John Bazemore/AP/File
    View Caption
  • About video ads
    View Caption

New U.S. single-family home sales unexpectedly fell in March, but the decline was concentrated in the West region, suggesting that the housing market continued to strengthen.

The Commerce Department said on Monday new home sales decreased 1.5 percent to a seasonally adjusted annual rate of 511,000 units. February's sales pace was revised up to 519,000 units from the previously reported 512,000 units.

Sales rose in the Midwest and South, but tumbled in the West and were unchanged in the Northeast.

Economists polled by Reuters had forecast new home sales, which account for about 8.7 percent of the housing market, rising to a 520,000 unit-rate last month.

U.S. financial markets were little moved by the data.

New home sales are volatile month-to-month. The decline in sales over the past three months likely does not signal a slowdown in the housing market, given a strong labor market and historically low mortgage rates.

A report last week showed a 5.1 percent surge in sales of previously owned homes in March.

The housing market is bucking a broadly weak economy, with data such as trade, industrial production, business spending and retail sales suggesting the economy lost considerable momentum in the first quarter after logging a 1.4 percent annualized growth rate in the fourth quarter.

First-quarter gross domestic product estimates are as low as a 0.3 percent rate. The government will release the advance first-quarter GDP estimate on Thursday.

The demand for housing is being fueled by a robust labor market, characterized by the lowest unemployment benefit claims since 1973, and mortgage rates near record lows. Labor market strength has increased employment opportunities for young adults, boosting household formation.

But a shortage of properties for sale, which is limiting choice for buyers and driving up prices, remains a constraint for the housing market.

Last month, the inventory of new homes on the market rose 2.1 percent to 246,000 units, the highest since September 2009. Despite the increase, new housing stock remains less than half of what it was at the height of housing bubble.

At March's sales pace it would take 5.8 months to clear the supply of houses on the market. That was the most since last September and was up from 5.6 months in February.

New single-family homes sales surged 18.5 percent in the Midwest and climbed 5.0 percent in the populous South.

Sales plunged 23.6 percent in the West, reversing February's 21.7 percent jump. The West has seen a sharp increase in home prices amid tight inventories. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Make a Difference
Inspired? Here are some ways to make a difference on this issue.
FREE Newsletters
Get the Monitor stories you care about delivered to your inbox.

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.




Save for later


Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items


Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items


Failed to save

You have already saved this item.

View Saved Items